1. Which of the following persons would occupy a line position in a department store? I. Sales manager II.

Manager, furniture department III. Manager, advertising department IV. Manager, personnel department A !nly I " !nly I and II # !nly I, II, III $ I, II, III, IV %. &he 'enefits of a successful (ust)In)&ime system include all of the following e*cept+ A funds tied up in inventories are released for use elsewhere. " inventory 'uffers are increased. # throughput time is reduced. $ defect rates are decreased. ,. A successful (I& system is 'ased upon which of the following concepts? A &he company must rely upon a large num'er of suppliers to ensure fre-uent deliveries of small lots. " &he company should always choose those suppliers offering the lowest prices. # &he company should avoid long)term contracts with suppliers so as to e*ert pressure on suppliers to ma.e prompt and fre-uent deliveries. $ A small num'er of suppliers ma.e fre-uent deliveries of specific -uantities thus avoiding the 'uildup of large inventories of materials on hand. /. Which of the following statements are true regarding financial and managerial accounting? I. "oth are mandatory. II. "oth rely on the same underlying financial data. III. "oth emphasi0e the segments of an organi0ation, rather than 1ust loo.ing at the organi0ation as a whole. IV. "oth are geared to the future, rather than to the past. A I, II, III, and IV " !nly II, III and IV # !nly II and III $ !nly II 2. to 'e a+ A " # $ &he cost of rent for a manufacturing plant is generally considered 3rime 4o 4o 5es 5es cost 5es 4o 4o 5es 3roduct cost

6. &he salary of the president of a manufacturing company would 'e classified as which of the following? A 3roduct cost " 3eriod cost # Manufacturing overhead $ $irect la'or 7. A increases. " increases. # $ increases. 8. fi*ed costs A constant. " fluctuate. # $ Varia'le cost+ increases on a per unit 'asis as the num'er of units produced remains constant on a per unit 'asis as the num'er of units produced remains the same in total as production increases. decreases on a per unit 'asis as the num'er of units produced

Within the relevant range, the difference 'etween varia'le costs and is+ varia'le costs per unit fluctuate and fi*ed costs per unit remain varia'le costs per unit are constant and fi*ed costs per unit 'oth total varia'le costs and total fi*ed costs are constant. 'oth total varia'le costs and total fi*ed costs fluctuate.

9. If the cost of goods sold is greater than the cost of goods manufactured, then+ A wor. in process inventory has decreased during the period. " finished goods inventory has increased during the period. # total manufacturing costs must 'e greater than cost of goods manufactured. $ finished goods inventory has decreased during the period. 1:. $elta Merchandising, Inc., has provided the following information for the year 1ust ended+ 4et sales ;1%8,2:: "eginning inventory %/,::: 3urchases 8:,::: <ross margin ,8,22: A " # $ &he ending inventory for the company at year end was+ ;62,/2:. ;%/,2::. ;1/,:2:. ;9,92:.

11. &he 'eginning 'alance of the =aw Materials inventory account for May was ;%7,2::. &he ending 'alance for May was ;%8,72: and ;1%8,9:: of raw materials were used during the month. &he materials purchased during the month cost+ A ;1,1,,::.

" # $

;1%7,62:. ;1,:,12:. ;127,62:.

1%. <a'el Inc. is a merchandising company. >ast month the company?s merchandise purchases totaled ;6,,:::. &he company?s 'eginning merchandise inventory was ;1,,::: and its ending merchandise inventory was ;12,:::. What was the company?s cost of goods sold for the month? A ;91,::: " ;6,,::: # ;62,::: $ ;61,::: 1,. @aac. Inc. is a merchandising company. >ast month the company?s cost of goods sold was ;8/,:::. &he company?s 'eginning merchandise inventory was ;%:,::: and its ending merchandise inventory was ;18,:::. What was the total amount of the company?s merchandise purchases for the month? A ;86,::: " ;8%,::: # ;8/,::: $ ;1%%,::: 1/. $uring (anuary, the cost of goods manufactured was ;9,,:::. &he 'eginning finished goods inventory was ;16,::: and the ending finished goods inventory was ;%:,:::. What was the cost of goods sold for the month? A ;1%9,::: " ;89,::: # ;9,,::: $ ;97,::: 12. &he Samuelson #ompany uses a 1o')order cost system. &he following data were recorded for (une+ (une 1 Added Wor. in 3rocess (o' 4um'er Inventory /72 ;1,::: /76 ; 9:: /77 ; 8:: /78 ; 6:: $uring (une $irect Materials ; /:: ; 6:: ; 9:: ; 1,1:: $irect >a'or ; %:: ; 8:: ;1,/:: ;1,9::

!verhead is charged to production at 7:A of the direct materials cost. (o's /72, /77, and /78 have 'een delivered to the customer. Samuelson?s Wor. in 3rocess inventory 'alance on (une ,: was+ A ;6,/2:. " ;%,86:. # ;%,,::. $ ;%,7%:. Bse the following to answer -uestion 16+

Wayne company uses a 1o' costing system and applies overhead to 1o's using a predetermined overhead rate 'ased on direct la'or)hours. &he company had the following inventories at the 'eginning and end of March+ March 1 $irect Materials Wor. in 3rocess Cinished <oods March ,1 ;,6,::: 18,::: 2/,::: ;,:,::: 1%,::: 7%,:::

&he following additional data pertain to operations during March+ $irect materials purchased ;8/,::: $irect la'or cost ;6:,::: $irect la'or rate ;7.2: per direct la'or)hour !verhead rate ;1:.:: per direct la'or)hour 16. A " # $ 17. $uring March total de'its to Wor. in 3rocess were+ ;8/,:::. ;%%:,:::. ;1//,:::. ;%,:,:::. &he computation of unit product costs involves an averaging process (o')order costing 5es 4o 5es 5es 4o 5es 4o 4o 3rocess costing

in+

A " # $

18. In a 1o')order cost system, the use of indirect materials would usually 'e recorded as a de'it to+ A =aw Materials. " Wor. in 3rocess. # Manufacturing !verhead. $ Cinished <oods. 19. @arrell #ompany uses a predetermined overhead rate 'ased on direct la'or hours to apply manufacturing overhead to 1o's. At the 'eginning of the year the company estimated its total manufacturing overhead cost at ;/::,::: and its direct la'or)hours at 1::,::: hours. &he actual overhead cost incurred during the year was ;,2:,::: and the actual direct la'or hours incurred on 1o's during the year was 9:,::: hours. &he manufacturing overhead for the year would 'e+ A ;1:,::: underapplied. " ;1:,::: overapplied. # ;2:,::: underapplied. $ ;2:,::: overapplied.

%:. #arlo #ompany uses a predetermined overhead rate 'ased on direct la'or hours to apply manufacturing overhead to 1o's. &he company estimated manufacturing overhead at ;%22,::: for the year and direct la'or)hours at 1::,::: hours. Actual manufacturing overhead costs incurred during the year totaled ;%7:,:::. Actual direct la'or hours were 1:2,:::. What was the overapplied or underapplied overhead for the year? A ;%,%2: overapplied. " ;%,%2: underapplied. # ;12,::: overapplied. $ ;12,::: underapplied. %1. &he Watts #ompany uses predetermined overhead rates to apply manufacturing overhead to 1o's. &he predetermined overhead rate is 'ased on la'or cost in $ept. A and on machine hours in $ept. ". At the 'eginning of the year, the company made the following estimates+ $ept. A $ept. " $irect la'or cost ;,:,::: ;/:,::: Manufacturing overhead 6:,::: 2:,::: $irect la'or hours 6,::: 8,::: Machine hours %,::: 1:,::: What predetermined overhead rates would 'e used in $ept A and $ept ", respectively? A 2:A and ;8.:: " 2:A and ;2.:: # ;12 and 11:A $ %::A and ;2.:: Bse the following to answer -uestions %%)%2+ &he information 'elow has 'een ta.en from the cost records of &ercel #ompany for the past year+ =aw materials used in production ;,%6,::: &otal manufacturing costs charged to 1o's during the year Dincludes raw materials, direct la'or, and manufacturing overhead applied at the rate of 6: percent of direct la'or cost 686,::: #ost of goods availa'le for sale 8%6,::: Selling and administrative e*penses %2,::: Inventories "eginning =aw Materials Wor. in 3rocess Cinished <oods %%. A " # $ Ending ;72,::: 8:,::: 9:,:::

; 82,::: ,:,::: 11:,:::

&he cost of raw materials purchased during the year amounted to+ ;/11,:::. ;,6:,:::. ;,16,:::. ;,,6,:::.

%,. to+ A " # $ %/. A " # $

$irect la'or costs charged to production during the year amounted ;1,2,:::. ;%%2,:::. ;,6:,:::. ;%16,:::. &he #ost of <oods Manufactured during the year was+ ;6,6,:::. ;766,:::. ;7,6,:::. ;716,:::.

%2. &he #ost of <oods Sold for the year D'efore disposition of any overhead under) or overapplied was+ A ;7,6,:::. " ;716,:::. # ;691,:::. $ ;8:1,:::. Bse the following to answer -uestions %6)%7+ Summit #ompany has provided the following inventory 'alances and manufacturing cost data for the month of (anuary+ Inventories+ (anuary 1 (anuary ,1 $irect materials ;,:,::: ;/:,::: Wor. in process ;12,::: ;%:,::: Cinished goods ;62,::: ;2:,::: Month of (anuary #ost of goods manufactured ;212,::: Manufacturing overhead applied ;12:,::: $irect materials used ;19:,::: Actual manufacturing overhead ;1//,::: Bnder Summit?s 1o')order costing system, any over or underapplied overhead is closed to the #ost of <oods Sold account at the end of the calendar year Di.e., $ecem'er ,1 . %6. (anuary? A " # $ %7. A " # What was the total amount of direct material purchases during ;18:,::: ;19:,::: ;192,::: ;%::,::: @ow much direct la'or cost was incurred during (anuary? ;17:,::: ;172,::: ;18:,:::

;186,:::

Bse the following to answer -uestion %8+ &he &se Manufacturing #ompany uses a 1o')order costing system and applies overhead to 1o's using a predetermined overhead rate. &he company closes any 'alance in the Manufacturing !verhead account to #ost of <oods Sold. $uring the year the company?s Cinished <oods inventory account was de'ited for ;1%2,::: and credited for ;11:,:::. &he ending 'alance in the Cinished <oods inventory account was ;%8,:::. At the end of the year, manufacturing overhead was overapplied 'y ;/,2::. %8. of the year A " # $ &he 'alance in the Cinished <oods inventory account at the 'eginning was+ ;%8,:::. ;1,,:::. ;17,2::. ;8,2::.

%9. Which costs will change with a decrease in activity within the relevant range? A &otal fi*ed costs and total varia'le cost. " Bnit fi*ed costs and total varia'le cost. # Bnit varia'le cost and unit fi*ed cost. $ Bnit fi*ed cost and total fi*ed cost. ,:. A " # $ #ontri'ution margin is the e*cess of revenues over+ cost of goods sold. manufacturing cost. all direct costs. all varia'le costs.

Bse the following to answer -uestions ,1),%+ <argymal #ompany would li.e to estimate the varia'le and fi*ed components of its electrical costs and has compiled the following data for the last five months of operations. Machine @ours #ost August 1,::: Septem'er 9:: !cto'er 1,2:: 4ovem'er %,::: $ecem'er 1,,:: ,1. per machine A " # Electrical ;1,6%: 1,21: 1,87: 1,92: 1,7,:

Bsing the high)low method of analysis, the estimated varia'le cost hour for electricity is closest to+ ;:./:. ;%.2:. ;:.98.

;1.68.

,%. Bsing the high)low method of analysis, the estimated fi*ed cost per month for electricity is closest to+ A ;1,,:6.2:. " ; 87:.::. # ;1,%9:.::. $ ;1,12:.::. Bse the following to answer -uestions ,,),/+ Wilson #ompany?s activity for the first si* of the current year is as follows+ Machine Electrical Month @ours #ost (anuary %,::: ;1,26: Ce'ruary ,,::: ;%,%:: March %,/:: ;1,72: April 1,9:: ;1,2%: May 1,8:: ;1,/8: (une %,1:: ;1,6:: ,,. 'e+ A " # $ Bsing the high)low method, the varia'le cost per machine hour would ;:.67. ;:.6/. ;:./:. ;:.6:.

,/. Bsing the high)low method, the fi*ed portion of the electrical cost each month would 'e+ A ;/::. " ;76:. # ;%8:. $ ;19:. Bse the following to answer -uestions ,2),8+ <asson #ompany is a merchandising firm. 4e*t month the company e*pects to sell 8:: units. &he following data descri'e the company?s revenue and cost structure+ Selling price per unit ;/: Sales commission 2A 3urchase price Dcost per unit ;18 Advertising e*pense ;/,::: per month Administrative e*pense ;/,2:: per month plus 12A of sales Assume that all activity mentioned in this pro'lem is within the relevant range. ,2. A &he e*pected net income ne*t month is+ ; 7,2::.

" # $ ,6. A " # $ ,7. A " # $ ,8. A " # $

; 2,1::. ; %,7::. ;11,%::. &he e*pected contri'ution margin ne*t month is+ ;17,6::. ;11,%::. ;1/,/::. ;16,:::. &he e*pected total administrative e*pense ne*t month is+ ; /,8::. ;1,,,::. ; 9,,::. ;1/,9::. &he e*pected gross margin ne*t month is+ ;17,6::. ;11,%::. ;1/,/::. ;16,:::.

Bse the following to answer -uestions ,9)/:+ &he following data are for 3otras #ompany+ "eginning Ending Cinished goods inventory ;,:,::: Wor. in process inventory ;%:,::: =aw materials inventory ;%1,::: 3urchases of raw materials ;71,::: Cactory depreciation ; 2,::: !ther factory costs ;1:,::: $irect la'or ;%7,::: Indirect la'or ; 6,::: Selling e*pense ;1%,::: !ver) or underapplied overhead ):) ,9. A " # $ /:. A " # $ ;/:,::: ;1,,::: ;%6,:::

&he cost of goods manufactured was+ ;11/,:::. ;1,,,:::. ;1%1,:::. ;1,8,:::. &he cost of goods sold was+ ;1,1,:::. ;91,:::. ;81,:::. ;111,:::.

Answer Fey )) a+GS3:1pE1 1. %. ,. /. 2. 6. 7. 8. 9. 1:. 11. 1%. 1,. 1/. 12. 16. 17. 18. 19. %:. %1. %%. %,. %/. %2. %6. %7. %8. " !rigin+ " !rigin+ $ !rigin+ $ !rigin+ A !rigin+ " !rigin+ " !rigin+ " !rigin+ $ !rigin+ # !rigin+ # !rigin+ $ !rigin+ " !rigin+ " !rigin+ $ !rigin+ $ !rigin+ " !rigin+ # !rigin+ " !rigin+ " !rigin+ $ !rigin+ $ !rigin+ " !rigin+ # !rigin+ " !rigin+ $ !rigin+ # !rigin+ " #hapter 1, Managerial Accounting and .......%/ #hapter 1, Managerial Accounting and .......,: #hapter 1, Managerial Accounting and .......,/ #hapter 1, Managerial Accounting and .......%7 #hapter %, #ost &erms, #oncepts, and .......18 #hapter %, #ost &erms, #oncepts, and .......%/ #hapter %, #ost &erms, #oncepts, and .......,, #hapter %, #ost &erms, #oncepts, and .......,/ #hapter %, #ost &erms, #oncepts, and .......,1 #hapter %, #ost &erms, #oncepts, and .......28 #hapter %, #ost &erms, #oncepts, and .......29 #hapter %, #ost &erms, #oncepts, and .......6: #hapter %, #ost &erms, #oncepts, and .......61 #hapter %, #ost &erms, #oncepts, and .......6% #hapter ,, Systems $esign+ (o')!rder ......./: #hapter ,, Systems $esign+ (o')!rder .......2: #hapter ,, Systems $esign+ (o')!rder .......17 #hapter ,, Systems $esign+ (o')!rder .......%1 #hapter ,, Systems $esign+ (o')!rder .......%8 #hapter ,, Systems $esign+ (o')!rder .......,: #hapter ,, Systems $esign+ (o')!rder .......,% #hapter ,, Systems $esign+ (o')!rder .......7: #hapter ,, Systems $esign+ (o')!rder .......71 #hapter ,, Systems $esign+ (o')!rder .......7% #hapter ,, Systems $esign+ (o')!rder .......7, #hapter ,, Systems $esign+ (o')!rder .......8/ #hapter ,, Systems $esign+ (o')!rder .......82

%9. ,:. ,1. ,%. ,,. ,/. ,2. ,6. ,7. ,8. ,9. /:.

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